Which City has the Best Office Market in America?
Which city has the Best Office Market in America? Our distinguished panel of commercial office property professionals took the stage at O.CON ’15 to make the case why their city leads all others in the expansion of Class A office product.
Our moderator: Michael Scheurich, President and CEO, Arch-Con Corporation. Representing San Francisco: Meade Boutwell, Senior Vice President, CBRE; Houston: Chip Colvill, President and CEO, Colvill Office Properties; New York City: Paul Frazier, Executive, Brookfield Property Partners; and Seattle: Dave Magee, Senior Director, Managing Broker | Washington Region, Commerce Real Estate Solutions.
The market is “extremely robust” – new supply is unable to keep pace with the demand for large blocks of space. Software/media-entertainment is over 60 percent of all Silicon Valley venture capital funding.
Pros: great mass transit; water on three sides; multiple major industries, one of which is always growing; most venture capital money is based there; great weather; access to recreation/the outdoors; influx of Chinese investors; and multiple professional sports teams.
Biggest threat to demand: Housing, housing, housing. It’s a “catastrophic problem.” Prices for housing are unbelievable; one example: $8,000 rent/month for a two-bedroom apartment.
Houston has proven time and again to be a resilient city and one that is not just about oil; “Houston now is the energy capital of the world.” Driving growth in Houston: The Texas Medical Center; the Port of Houston; energy companies and energy service companies; Fortune 500 companies; and the growing presence of Millennials.
Pros: Low cost of living, especially compared to other large cities, which is attractive to Millennials when combined with plentiful job opportunities. Phenomenal job growth over the last few years, with 381% of the jobs lost in the Great Recession regained as of December 2014.
Biggest threat to demand: No mass transit; lots of traffic.
New York City:
The average age of an existing building in NYC is 70 years old. TAMI (technology, advertising, media and information) tenants – not necessarily financial companies – are driving growth of new buildings with more efficient floorplates, modern design and the latest technology.
Pros: Financial capital of the world; high quality of life; steady growth; financial services sector has not begun to grow again, but the expectation is that when it does, demand will increase.
Biggest threat to demand: Overbuilding.
“Seattle is in its infancy and has tremendous growth opportunity.” It’s establishing itself as a forward-thinking development city. It attracts Millennials and cutting-edge companies.
Pros: The 9 “B”s of Seattle: Billionaires like Bill Gates and Elon Musk; Biotech: a robust biotechnology sector; Bytes: Microsoft, Amazon, Expedia, gaming companies, Google, eBay, Apple…the list goes on; Books: Amazon – 30,000 employees, 10 million sf occupied or soon-to-be occupied; Bands: Millennials are the drivers of tomorrow. There’s a tremendous amount of wealth and a highly-educated, younger population; Brew: Think not only Starbucks but also craft distilleries; Boots: a large military population with a Naval Airbase, Army and Air Force presence, aircraft carrier station and submarine station; Boats: Port of Tacoma and Port of Seattle; and Boeing: 80,000 employees in the Seattle area.
Biggest threats to demand: traffic and housing.
Which city do you think has the best office market in America? Let us know in the comments below.
Marie Ruff is Communications Senior Manager at NAIOP.